The Coalition’s climate policy review suggests Australian businesses may be allowed to increase their emissions as their production increases.
Photograph: Alamy

The Turnbull government will allow the use of international carbon permits, roll over its emissions reduction fund and loosen the current safeguard mechanism that sets limits on pollution as part of a review of climate policy released on the same day as a ministerial reshuffle.

The late-year release of the climate policy review, which points to allowing Australian businesses to increase their emissions as their production grows, comes as new figures confirm Australia’s annual greenhouse gas emissions are the highest on record when emissions from land use change are excluded, as well as projections suggesting the country will increase its emissions all the way to 2030 and beyond.

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The review of climate policies by the Department of Environment and Energy signals the government will keep the emissions reduction fund, the centrepiece of the Direct Action policy, but it doesn’t quantify the cost of rolling it over.

The government will have to make a decision in the May budget about how much to allocate to the fund, which currently sees taxpayers pay for carbon abatement rather than big polluters. The fund started at $2.55bn and about $260m remains in the fund now.

While some climate policy experts had thought the Turnbull government might use the review to toughen the existing safeguards mechanism in order to curb emissions growth, the climate policy review goes in the opposite direction, suggesting baselines could “increase with production, supporting business growth”.

The safeguards mechanism sets emissions “baselines”, or limits, for big polluters. The new climate review points clearly to loosening it, to ensure business does not face restraints on growth, with changes to be implemented in the 2018-19 compliance year, in consultation with industry.

It says the mechanism needs to be “fairer and simpler” and it says changes are required to “address the risk of potential constraints on business growth raised by a number of stakeholders through the review”.

As well as opening the door for businesses to boost their emissions, the new review also flags the use of international permits to help Australia meet its international emissions reductions commitments – a practice Tony Abbott ruled out when he was prime minister.

While Abbott used to characterise the trade of international credits as “money that shouldn’t be going offshore into dodgy carbon farms in Equatorial Guinea and Kazakhstan”, the climate review says “access to high-quality international units will provide greater flexibility to business and government in meeting emissions reduction targets”.

The climate policy review backs a new light vehicle fuel efficiency standard to reduce transport emissions, without being definitive, and it declares Australia will meet its international climate commitments.

It also confirms the government will in 2018 start developing “a long-term emissions reduction strategy by 2020” but it qualifies the objective by noting the “strategy will not be prescriptive”.

Despite the climate change policy review declaring the government’s current set of policies can meet Australia’s greenhouse gas reduction commitments, the latest data shows Australia is continuing to increase its emissions, making the targets harder to achieve.

Australia’s total emissions in the three months to June 2017 were 136.2 million tonnes of CO2-equivalent – more than any other June quarter since 2011.

But the those emissions were the highest for any June quarter on record when emissions from land-use change are excluded, which the government says are the most unreliable and appear to not account for massive emissions caused by a tree-clearing crisis gripping eastern and northern Australia.

The figures now form a clear trend, with the emissions over the previous four quarters also the highest on record, when unreliable emissions from land-use change are excluded.

The government also quietly released its annual emissions projections today, concluding that, despite commitments to reduce our greenhouse gas emissions, they will be higher in 2030 than they are today.

The projections do not include any modelling of possible vehicle emissions standards, or a national energy guarantee (Neg). However, since emissions are forecast to grow in all sectors, reductions in electricity and transport will not be enough to meet the government’s 2030 targets.